Britain's Brexit deal receives a boost after the report urged the bloc to retain ties to the City
Experts have warned Brussels bureaucrats that a bad Brexit deal for Europe’s biggest financial centre or significant changes to the current financial ecosystem could damage the economic health of countries across the continent.
The report, drawn up by officials from the European Parliament’s committee on economic and monetary affairs (ECON), states: “A badly designed final deal would damage both the UK and the other 27 EU member states.
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“The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU.
“It is in the interest of EU 27 and the UK to have an open discussion on this point.
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A badly designed final deal would damage both the UK and the other 27 EU member states
“If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated.”
The City of London’s financial district is a hugely important bargaining chip for Theresa May as she tries to get “the best possible deal for Britain” as the Square Mile accounts for 60 per cent of Europe’s capital market business and 40 per cent of its assets.
In addition to this, the document seen by the Guardian reveals that banks based in Britain “provide more than £1.1tn of loans to the other EU member states” – suggesting the consequences of declining economic relations between Britain and the EU could be bad for both parties.
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The report continues: “Given the considerable interdependence between the UK and the EU economy and financial systems, it is critical that a workable agreement is achieved that not only maintains high regulatory standards but also delivers growth and jobs across the EU …
“As an overriding principle, one can assume that after Brexit, the closer the UK remains to established EU regulatory standards, the greater the degree of access the UK can have to the single market – and vice versa, without prejudice to other considerations (eg the principle of the unity of the four freedoms).
The City of London is hugely important to the EU economy
“If the UK does leave the single market and thereby resigns from the four freedoms and the jurisdiction of the court, then consideration could be given to tools such as third country/equivalence passporting regime, and this should be taken into account on existing regimes as well as future pieces of financial legislation: eg on securitisation.”
After MPs opted to vote in favour of triggering Article 50 as Brexit passed its first hurdle in the House of Commons on Wednesday evening, news of the report will undoubtedly lend support to Eurosceptic MPs keen on getting negotiations underway as soon as possible.